Chairman’s Statement

As CEO, it gives me great pleasure to present the CEO’s statement of the annual report for the year ended 31 December 2018. With the full cooperation of the construction companies, designers and equipment suppliers, the construction of the mine site at the Pakrut gold project was successfully completed at the end of 2018 with US$17.9m revenue being generated from trial production in the period. Following the successful completion of infrastructure and construction works at the mine site, the Pakrut gold project entered full operation in 2019 and is currently producing at levels of 2,000 tons per day.

This marks a new chapter for the Group as it becomes an important gold producer in Tajikistan and brings steady cash flows to support the sustainable development of the company.

Construction

2018 was a critical year for the Pakrut gold mine. The flotation tailings pond, filling station, mine camp and underground ventilation system, all of which began construction after the snowfall damage, were successfully completed and commissioned at the end of 2018, meaning that the construction works surrounding the Pakrut gold project were finalised and it has been possible to commence full production in 2019.

Operation

Through the joint efforts of company staff, the Pakrut gold mine produced the first gold since the suspended production in 2017 as a result of the snowfall disaster. In 2018, from trial production, a total of 268,200 tons of ore were processed at a grade of 2.18 g/t, 9,030 tons of gold concentrate were produced at a grade of 63.58 g/t, 451.46kg of gold bullion were poured with a comprehensive recovery rate of 80.89%. This achievement was hard-won because both construction and trial production for Pakrut gold project were carried out at the same time in 2018 to ensure that the Group could enter full production in 2019.

Full production commenced at the start of 2019 and from January to April 2019, 186,800 tons of ore were processed, 5,325 tons of gold concentrate were produced, the recovery rate of processing was 86.77%, the recovery rate of smelting was 87.3% and the output of gold ingots was 350kg. Revenue to April 2019 is US$12.5m and gross margin for the same period is 31.14%.

Financial Results

As progress on the Pakrut project moved towards completion during the year, expenditure continued to be incurred by the Group on development and construction work and as at 31 December 2018 the value of mines under construction stood at US$397,876,955 (2017: US$331,160,369). Administration expenditure was US$6,371,750 (2017: US$5,084,991). The main reason for the increase is due to higher local taxes paid in Tajikistan during 2018 as a result of increases in subsoil taxes.

The overall loss incurred by the Group was US$4,483,499 (2017: US$15,036,884). The reduced loss is mainly as a result of the 2017 impairment to Mines under construction of US$10,702,895. In addition, in the current year other income of US$2.8 million (2017: US$Nil) has been generated, being compensation from the insurance provider following the snowfall disaster in early 2017.

During the course of the year, the Group signed financing agreements with CNMC International Capitals Company Limited（Ⅱ）, an associate of China Nonferrous Metals International Mining Co., Ltd for a loan facility of USD$90 million (“CNMC Loan”). The time limits on the loan contracts previously signed with China National Capital International Co, Ltd., China Nonferrous Metals International Mining Co., Ltd. and China Nonferrous Metals Mining Group Co., Ltd. were extended to December 2019.

In July 2018, CNMC and China National Economic Trade Co, Ltd. signed an agreement transferring one of the loans of US$20 million to China Nonferrous Mining Group Co, Ltd. to Zhongse Economic and Trade Co., Ltd which constitutes a related party under the AIM Rules for Companies. In 2018, the Group repaid a loan of US$35 million to China Construction Bank Corporation Macau Branch.

The existing CCBC loan facility of US$85 million and the CNMC and CNMIM loan facilities of US$260 million amounted to US$345 million in total of loans payable as at 31 December 2018. Of this, US$163 million is payable within one year of the financial statements, which includes US$10 million due to CCBC and the remaining balance due to shareholders. The CCBC loan is due for repayment in March 2021.

Events after the Reporting Period

In January 2019, the Group drew down US$20 million on a US$30 million loan facility with China Construction Bank Corporation Macau Branch. The contract was signed in November 2018 but at that time there was no withdrawal.

As mentioned earlier, in order to ensure the repayment of existing loans, a broader refinancing is required. Discussions are ongoing and with the signing of the new loan agreement, the remaining discussions are expected to be completed in the near term. The Group has now entered full production and this should enable sufficient working capital to be raised. As previously announced, to ensure repayment of the existing facilities as they fall due, a wider refinancing will be required.

Outlook

With the completion of mine construction and improvement of technology, the Pakrut gold mine has now entered into full production, and the annual revenue target of ore is expected to increase based on normal operations in 2019.

The Group is currently continuing to enhance its production capacity and intends to double this capacity by 2021. Whilst improving production, the Group is also focusing on perfecting and improving the smelting process by reducing production costs, increasing recovery rates and improving competitiveness.

The Group has long been dedicated to becoming a significant gold producer in Central Asia and participating in the “Belt and Road Initiative” with the substantial support and advantages of major shareholders. The Group has also established a strong relationship with the government of Tajikistan and other Central Asian countries and is well positioned to potentially gain more gold resources and gold mines so as to create greater benefits for its shareholders in the future.

I would like to take this opportunity to thank all our employees, management and advisors for their continued efforts in 2018 and thank our shareholders for their continued support. I very much look forward to updating our shareholders further on the mine developments, production levels, new strategy and direction.

Yu Lixian

CEO

28 June 2019